Step 4: File incorporation paperwork with the State of Delaware
The Certificate of Incorporation is the document that is filed with the Delaware Division of Corporations to officially create a corporation. (In other states, this formation document is often referred to as the Articles of Incorporation.)
Delaware Certificate of Incorporation requirements:
- Corporate name
- Registered agent name
- Registered office address
- Number and type of corporate shares
- Incorporator name, address, and signature
Step 5: Hold an organizational meeting
After forming a corporation, you must observe certain corporate formalities (such as having annual directors’ and shareholders’ meetings and more) in order to preserve the limited liability a corporation provides its owners.
The purpose of the initial organizational meeting is to complete the organization of the corporation after the Articles of Incorporation is filed. If initial directors are named in the Articles of Incorporations, these directors hold the meeting. If initial directors are not named, the incorporator holds the meeting. A sample of the actions required to complete the organization include -
- Appointing directors (if initial directors were not named in the Certificate of Incorporation)
- Adopting corporate bylaws
- Electing officers
- Issuing stock
- Selecting a corporate bank
- Setting the organization’s fiscal year
- Setting up a corporate records book
Step 6: Prepare corporate bylaws
Corporate bylaws set out the basic rules for how the business and affairs of the corporation will be conducted. This governing document is not filed with the state, but most states require that corporations have bylaws and make them available to shareholders upon request.
Bylaws generally cover areas of internal management, including the roles of directors and officers and the holding of shareholders’ and directors’ meetings. Bylaws may contain any provision not inconsistent with law or the Certificate of Incorporation.
Step 7: Issue shares of stock
Stock refers to the overall ownership in a corporation, while shares represent units or a percentage of that ownership. This is why the owners of a corporation are referred to as shareholders.
A corporation may issue any amount of shares up to the authorized amount set forth in the Certificate of Incorporation. To increase the authorized amount requires an amendment to the incorporation document.
Step 8: Get an EIN
A federal employer identification number, or EIN, is an IRS-issued identification number for businesses. An EIN is also commonly referred to as a FEIN or federal tax ID number. All corporations are required by federal tax law to obtain an EIN.
An EIN is used for tax filings, as well as for other important business activities, such as opening a business bank account, obtaining a loan, or paying invoices. Check out our article on federal EINs for more information.
Step 9: Select a tax election (S corporations)
In order for a corporation to become an S corporation, it will need to meet eligibility requirements and file Form 2553 (Election by a Small Business Corporation) with the IRS.
Note that an S corporation is not a separate business structure, but an IRS tax classification. By default, a corporation is taxed by the IRS as a C corporation.
Read What is an S Corp for information on the difference between taxation under Subchapter S of the Internal Revenue Code and Subchapter C, eligibility requirements for filing, and information on maintaining tax status under Subchapter S.
Step 10: Comply with other tax and regulatory requirements for Delaware businesses
Your Delaware corporation may be required to complete additional compliance steps in order to legally do business in the state. The following are a few possible requirements:
- Delaware business license. Many businesses will need to obtain a state business license from the Delaware Division of Revenue.
- Occupational licenses. A number of professions and industries require registration with and obtaining licensing from the Delaware Division of Professional Regulations.
- Employees. Your business will have specific requirements if it has employees, including having a federal EIN, registering with the Delaware Division of Unemployment Insurance, and registering with the Delaware Office of Workers Compensation.
- Local business licenses and permits. Your Delaware corporation may need to obtain a local business license, as well as fulfill other local license and permit requirements.
- DBA name registration. If the corporation plans on conducting business using a name other than the one listed on its Certificate of Incorporation, the corporation will need to register its trade or DBA (“doing business as”) name in each Delaware county where it is doing business.
- Annual report and franchise tax. Delaware corporations are required to file an annual report and pay annual franchise taxes.
